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whether tds should be deducted on the amount of service tax

pankaj jain (articled trainee (c.a cleared) (26 Points)

07 April 2008

hello friends well i m a new member of the club.but my question is not as i want to know whether TDS should be deducted on the amount of service tax amount.

plz provide the settled answer with the support of any court decision /any circular/notification.

thanks and regards.

pankaj jain.

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12 Replies

CHANDRA JYOTI PANIGRAHI (JOB HOLDER) (71 Points)
Replied 07 April 2008

Yes Tds should be deducted on Service Tax .

CHANDRA JYOTI PANIGRAHI (JOB HOLDER) (71 Points)
Replied 07 April 2008

Please refer to the clarification given by CBDT in Aug 07

Prasad R (CA Final) (2128 Points)
Replied 07 April 2008

yes definitely TDS has to be deducted from the amt including service tax.

CA Sanjay Shah (Chartered Accountant) (34 Points)
Replied 08 April 2008

yes TDS has to be deducted on Service Tax.

(Guest)

no, TDS should not be deducted on the service tax amt.

As TDS is the tax deduction on the income of the payee in advance. as the service tax is not the income of the payee. Payee has to deposit it with the treasury. So it should not be deducted on the service tax mat.

pankaj jain (articled trainee (c.a cleared) (26 Points)
Replied 08 April 2008

hello friend,

well i tried to find out the clarification u mentioned but could not find the same.

could u plz tell me the way to find out the said clarification.

thanks and regards,

pankaj jain

CA. Dashrath Maheshwari (TaXpert) (15090 Points)
Replied 08 April 2008

The tax is required to be deducted at source on the gross amount of bill which is inclusive of service tax as per the clarification issued by the Department. CBDT in circular no. 715 has clarified that Section 194 C and 194 J refer to "any sum paid" and obviously reimbursement cannot be deducted out of bill amount for the purpose of TDS. Therefore, considering the above circular and the amount to be debited in books as expenditure, the tax has to be deducted on the entire amount of bill inclusive of service tax.

(Guest)

thank u sir

Nilesh Retwade (Article Assistance) (21 Points)
Replied 24 March 2011

tds should be deducted on the amount of service tax also

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 24 March 2011

TDS is deducted on payment, not on the item and tax bifurcation, so the whole payment is liable to TDS, only exemption is RENT where the TDS is deducted excluding service tax.

Vinit Kumar Singhal (Accountant) (23 Points)
Replied 31 March 2011

Clarification on deduction of tax at source (TDS) on service tax component on rental income under section 194-I of the Income-tax Act CIRCULAR NO. 4/2008, DATED 28-4-2008 Representations/letters have been received in the Board seeking clarification as to whether TDS provisions under section 194-I of the Income-tax Act will be applicable on the gross rental amount payable (inclusive of service tax) or net rental amount payable (exclusive of service tax). 2. The matter has been examined by the Board. As per the provisions of 194-I, tax is deductible at source on income by way rent paid to any resident. Further rent has been defined in 194-I as rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,- (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee; 3. Service tax paid by the tenant doesn't partake the nature of income of the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore it has been decided that tax deduction at source (TDS) under sections 194-I of Income-tax Act would be required to be made on the amount of rent paid/payable without including the service tax. 4. These instructions may be brought to the notice of all officers working in your region for strict compliance. 5. These instructions should also be brought to the notice of the officers responsible for conducting internal audit and adherence to these should be checked by the auditing parties. [F.No.275/73/2007-IT(B)] As per Income Tax Act for TDS on Rent need not be deducted on Service Tax Component. As per Circular No.4/2008, Dated 28-04-2008.

aadish (456) (771 Points)
Replied 11 September 2012

TDS is not to be deducted if reimbursemen of expenses bill raised seperately cz that is not income, as per the circular no. 715 and case ITO V willmar india p ltd. 2005.